New Delhi: Gearing up to introduce trains that run at speeds of more than 300kmph, the railways have formed a new Special Purpose Vehicle (SPV) to implement the Mumbai-Ahmedabad High Speed Bullet Train project.

The entity has been named the National High Speed Rail Corporation Limited.

An Indian Railways train. AFP

The bullet train is expected to cover the 508 km between Mumbai and Ahmedabad in about two hours, running at a maximum speed of 350 kmph and operating speed of 320 kmph.

Currently, Duronto takes about seven hours to cover the distance between the two financial centres of the country.

Estimated to cost about Rs 97,636 crore, 81 percent of the funding for the project would come by way of a loan from Japan. The project cost includes possible cost escalation, interest during construction and import duties.

It is a soft loan for 50 years at 0.1 percent annual interest with 15 years' moratorium period, said a senior railway ministry official.

Maharashtra and Gujarat are expected to participate in the equity for the SPV, while the Railways will have 50 percent. The balance would be contributed by the state governments of Maharashtra and Gujarat.

For timely completion of the project, a Joint Committee has been formed under the Vice-Chairman of NITI Aayog with the secretaries of the Department of Industrial Policy and Promotion (DIPP), Departments of Economic Affairs and foreign ministry as its members along with the Railway Board Chairman.

He said it will take about seven years after the awarding of the contract for the project to be completed as a lot of new technologies would be used to construct the high-speed corridor.

According to a survey, approximately 13 million passengers per annum will be availing the service once it is launched.